§ 500. Defined Contribution Retirement Plan
(a) The State Treasurer shall offer a retirement plan for State employees who are not
members of the classified system. The Plan shall qualify as a defined contribution
plan under the U.S. Internal Revenue Code, as amended. Participation in such plan
shall be in lieu of the retirement plans established under chapter 16 of this title.
(b) Employees who are not members of the classified system who are first employed by the
State on and after January 1, 1999, and would otherwise be members of Group A, B,
C, D, F, or G of the Vermont State Retirement System shall be eligible to participate
in the Defined Contribution Retirement Plan.
(c) Employees who elect to participate in the Defined Contribution Retirement Plan shall
contribute at the rate of 2.85 percent of the employee’s compensation for each payroll
period. The State shall contribute to each employee’s account at the rate of seven
percent of the employee’s compensation for each payroll period. Employees may make
additional after-tax contributions to the plan, provided that total annual contributions
by an employee and employer in any calendar year shall not exceed the maximum permitted
for such plans under the U.S. Internal Revenue Code.
(d) Election to participate in the Defined Contribution Retirement Plan is irrevocable,
unless:
(1) the employee becomes a classified employee and elects to transfer his or her membership
and the full actuarial value of the accrued benefit calculated on a cost neutral basis
to the Vermont State Retirement System; or
(2) the employee is appointed to a position that is eligible for membership in the Group
D plan. Within 60 days of appointment, the employee may choose to participate in the
Group D plan and cease participation in the defined contribution plan. Upon an election
to participate in the Group D plan, the State Treasurer shall apply the funds accumulated
in the employee’s defined contribution account toward purchasing retirement credit
in the Group D plan by first applying the funds toward purchasing any Group D eligible
credit earned from the date of the judicial appointment and then applying the funds
toward purchasing credit in the retirement group plan or plans for which the employee
would have formerly been eligible.
(e) An employee who elects to participate in the Defined Contribution Retirement Plan
shall become vested in the Plan after completion of one year and 11 months of creditable
service as a State employee.
(f) An employee who has elected to participate in the defined contribution plan and, after
having accrued a minimum of five years of service, becomes disabled as determined
by the Social Security Administration or by a State-purchased disability insurance
policy while currently employed by the State, shall be entitled to continue the same
health and dental benefits that are available to members of the Vermont State Retirement
System who qualify for disability retirement benefits.
(g) Upon retirement, employees who elect to participate in the Defined Contribution Retirement
Plan shall be entitled to the same life, dental, and health insurance benefits available
to members of the Vermont State Retirement System.
(h) The State Treasurer shall certify to the Governor or Governor-Elect a statement of
the percentage of the payroll of all participating employees sufficient to fund all
operating expenses of the defined contribution retirement plan and all contributions
of the State that will become due and payable during the next biennium. Contributions
by the State shall be charged to the departmental appropriation from which the employees’
salaries are paid and shall be included in each departmental budgetary request.
(i) The Plan shall be administered by the State Treasurer who shall adopt rules necessary
to implement and administer the provisions of this chapter. (Added 1997, No. 129 (Adj. Sess.), § 1; amended 1999, No. 158 (Adj. Sess.), § 20; 2005, No. 151 (Adj. Sess.), § 1; 2005, No. 163 (Adj. Sess.), § 4; 2007, No. 146 (Adj. Sess.), § 2; 2019, No. 25, § 1, eff. May 16, 2019; 2023, No. 3, § 99, eff. March 20, 2023.)